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on Labour Economics |
| By: | Sandra Schaffner; Jochen Kluve |
| Abstract: | Numerous studies, in particular for the US, have shown that individuals in occupations with high injury risk are compensated for that risk by corresponding bonus payments. At the same time, male workers are overrepresented in the most dangerous occupations like scaffolders or miners, while females typically work in relatively safe occupations with respect to occupational injuries. It is therefore remarkable that almost all studies analyzing the gender wage gap have disregarded different occupational injury risks as a potential explanatory variable for observed gender wage differentials. By merging data on occupational injury risks to German and US panel data on individual workers, this study analyzes gender wage differentials in Germany and the US considering fatal occupational injury risk. The Blinder-Oaxaca method for tobit models is used to decompose the gender wage gap with and without consideration of the fatal injury risk. Our results indicate that the compensating wage differentials for risky jobs are reflected in the resulting gender wage gap, which is caused by the unequal distribution of occupational injury risks among men and women. |
| Keywords: | Gender wage differentials, occupational injury risk, compensating wage differentials, Blinder-Oaxaca decomposition |
| JEL: | J16 J17 J31 J7 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0028&r=lab |
| By: | Gautier, Pieter A; Moraga-González, José-Luis; Wolthoff, Ronald |
| Abstract: | We present a structural framework for the evaluation of public policies intended to increase job search intensity. Most of the literature defines search intensity as a scalar that influences the arrival rate of job offers; here we treat it as the number of job applications that workers send out. The wage distribution and job search intensities are simultaneously determined in market equilibrium. We structurally estimate the search cost distribution, the implied matching probabilities, the productivity of a match, and the flow value of non-labor market time; the estimates are then used to derive the socially optimal distribution of job search intensities. From a social point of view, too few workers participate in the labor market while some unemployed search too much. The low participation rate reflects a standard hold-up problem and the excess number of applications result is due to rent seeking behavior. Sizable welfare gains (15% to 20%) can be realized by simultaneously opening more vacancies and increasing participation. A modest binding minimum wage or conditioning UI benefits on applying for at least one job per period, increases welfare. |
| Keywords: | job search; labour market frictions; search costs; structural estimation; wage dispersion; welfare |
| JEL: | C14 E24 J21 J31 J64 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6440&r=lab |
| By: | Korpi, Tomas (Swedish Institute for Social Research, Stockholm University); Tåhlin, Michael (Swedish Institute for Social Research, Stockholm University) |
| Abstract: | We examine the impact of educational mismatch on wages and wage growth in Sweden. The empirical analyses, based on cross-sectional and panel data from the Level of living surveys 1974-2000, are guided by two main hypotheses: (a) that educational mismatch reflects human capital compensation rather than real mismatch, and (b) that educational mismatch is real but dissolves with time spent in the labour market, so that its impact on wages tends toward zero over a typical worker’s career. Our findings do not support these hypotheses. First, significant differences in contemporaneous economic returns to education across match categories remain even after variations in ability are taken into account. Second, we find no evidence that the rate of wage growth is higher among overeducated workers than others. Our conclusion is that the overeducated are penalized early on by an inferior rate of return to schooling from which they do not recover. |
| Keywords: | Educational mismatch; overeducation; wages |
| JEL: | J24 J31 J62 |
| Date: | 2007–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sofiwp:2007_010&r=lab |
| By: | Robert Shimer |
| Abstract: | This paper uses readily accessible data to measure the probability that an employed worker becomes unemployed and the probability that an unemployed worker finds a job, the ins and outs of unemployment. Since 1948, the job finding probability has accounted for three-quarters of the fluctuations in the unemployment rate in the United States and the employment exit probability for one-quarter. Fluctuations in the employment exit probability are quantitatively irrelevant during the last two decades. Using the underlying microeconomic data, the paper shows that these results are not due to compositional changes in the pool of searching workers, nor are they due to movements of workers in and out of the labor force. These results contradict the conventional wisdom that has guided the development of macroeconomic models of the labor market during the last fifteen years. |
| JEL: | J6 E24 E32 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13421&r=lab |
| By: | Fred Henneberger (University of St. Gallen); Alfonso Sousa-Poza (University of Hohenheim and IZA); Alexandre Ziegler (University of Lausanne) |
| Abstract: | Implementing performance pay requires that workers' output be measured. When measurement costs differ among firms, those with a measurement cost advantage choose to implement performance pay. They attract the best workers, and both the level and variability of compensation are higher at these firms than at salary firms. Workers may select firms with different compensation methods at different stages of their work life. Productive workers start at performance pay firms and switch to salary firms once their productivity is revealed. The magnitude of the resulting worker flows depends on the payoff from effort and is therefore related to the age profile of the wage differential between performance pay and salary firms. Advantages in measuring worker productivity constitute a plausible explanation for the emergence of specialized business related service (BRS) firms. Accordingly, BRS firms should make a much wider use of performance pay and employ better workers than diversified corporations. Data from the 1998 Swiss Wage Structure Survey confirm the model's predictions both for the economy at large and for BRS firms. |
| Keywords: | asymmetric information, sorting, incentives, productivity, outsourcing |
| JEL: | J22 J29 J50 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3019&r=lab |
| By: | John T. Addison (Queen’s University Belfast, University of South Carolina, Universidade de Coimbra/GEMF and IZA); Pedro Portugal (Banco de Portugal, Universidade Nova de Lisboa and IZA) |
| Abstract: | In Portugal duration of benefits is exclusively age determined while replacement rates are to all intents and purposes uniform. We exploit differences in potential maximum duration of benefits for nearly matched pairs of individuals who differ in age by one year and in potential maximum duration of benefits by three months. In specifications that take account of unobserved individual heterogeneity, while controlling for pure age effects on escape rates, we find that lower maximum benefit duration is associated with substantially higher quarterly rates of job finding in the range 53 to 106 percent. |
| Keywords: | unemployment benefits, unemployment duration, job search |
| JEL: | J64 J65 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3016&r=lab |
| By: | Peter Berkhout (SEO Amsterdam); Joop Hartog (University of Amsterdam and IZA) |
| Abstract: | Firms hiring fresh graduates face uncertainty on the future productivity of workers. Intuitively, one expects starting wages to reflect this. Formal analysis supports the intuition. We use the dispersion of exam grades within a field of education as an indicator of the heterogeneity that employers face. We find solid evidence that starting wages are lower if the variance of exam grades is higher and that starting wages are lower if the skew is higher: employers shift quality risk to new hires, but pay for the opportunity to catch the really good workers. |
| Keywords: | wages, risk, ability |
| JEL: | J31 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3026&r=lab |
| By: | Beker, Pablo F (Department of Economics, University of Warwick) |
| Abstract: | In the early stages of the process of industry evolution, firms are financially constrained and might pay different wages to workers according to their expectations about the prospects for advancement offered by each firm’s job ladder. This paper argues that, nevertheless, if the output market is competitive, the positive predictions of the perfectly competitive model are still a good description of the long run outcome. If firms maximize the discounted sum of constrained profits, financing expenditure out of retained earnings, profits are driven down to zero as the perfectly competitive model predicts. Ex ante identical firms may follow different growth paths in which workers work for a lower entry-wage in firms expected to grow more. In the steady state, however, workers performing the same job, in ex-ante identical firms, receive the same wage. I explain when the long run outcome is efficient, when it is not, and why firms that produce inefficiently might drive the efficient ones out of the market even when the steady state has the positive properties of aWalrasian equilibrium. To some extent, it is not technological efficiency but workers’ self-fulfilling expectations about their prospects for advancement within the firm that explains which firms have lower unit costs, grow more, and dominate the market. |
| Keywords: | Industry Evolution ; Market Selection Hypothesis ; Production under Incomplete Markets ; Retained Earnings Dynamic ; Self-Fulfilling Expectations ; Internal Labor Markets |
| JEL: | D21 D52 D61 D84 D92 J41 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:813&r=lab |
| By: | Peter A. Riach (IZA (Research Fellow)); Judith Rich (University of Portsmouth and IZA) |
| Abstract: | Carefully-matched pairs of written job applications were made to test for age discrimination in hiring. A twenty-one year-old and a thirty-nine year-old woman applied for jobs where a "new graduate" was sought; men aged twenty-seven and forty-seven, inquired about employment as waiters; women aged twenty-seven and forty-seven, inquired about employment in retail sales. The rate of net discrimination against the older graduate, and against the older waiters in their London inquiries, correspond to the highest rates ever recorded anywhere, by written tests, for racial discrimination. There was a statistically significant preference for the older applicant in retail sales. |
| Keywords: | age, discrimination, employment, field experiment, hiring |
| JEL: | J71 C93 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3029&r=lab |
| By: | Dario Sciulli (University of Pescara and CEEAplA); António Gomes de Menezes (University of the Azores and CEEAplA); José Cabral Vieira (University of the Azores, CEEAplA and IZA) |
| Abstract: | In this paper we use Portuguese data on individual (multiple) unemployment spells and apply semi-parametric duration models to investigate the effects of different types of disabilities on (re)employment probabilities. We find that disabled persons with muscular, skeletal, geriatric and sensorial problems experience the longest unemployment spells. Organic (blind, deaf or linguistic) disabilities also significantly reduce the probability of finding a job, while intellectual or psychological disabilities do not. We also find that having previous employment experience and vocational training raise the probability of leaving unemployment into employment. Negative duration dependence and unobserved heterogeneity are also found in the data. Policies that seek to promote job accessibility should take into account the heterogeneous nature of the effects of different disabilities on reemployment. |
| Keywords: | unemployment duration, disability, hazard models |
| JEL: | J64 I12 C41 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3028&r=lab |
| By: | Chen, Natalie (University of Warwick, CEPR); Conconi, Paola (Universit´e Libre de Bruxelles (ECARES) and CEPR); Perroni, Carlo (University of Warwick) |
| Abstract: | Household migration can affect labor market opportunities differently for the two spouses, both because of gender-specific differences between the skills of migrants and the skills that are in demand in the host country, and because of differences in the extent of gender-based labor market discrimination between the country of origin and the host country. Standard bargaining theory suggests that, if household migration leads to a comparative improvement in labor market opportunities for married women, it should be beneficial to them. We show that, if renegotiation possibilities for migrant women are limited, the opposite may be true, particularly if women are specialized in household activities and the labor market allows more flexibility in their labor supply choices. Evidence from the German Socio-Economic Panel indeed shows that, holding everything else constant, improvements in relative wages for migrant women do not translate into better outcomes for them. |
| Keywords: | International Migration ; Marriage ; Renegotiation ; Gender |
| JEL: | F2 D1 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:812&r=lab |
| By: | Núria Rodríguez-Planas |
| Abstract: | Recent empirical evidence has found that employment services and small-business assistance programmes are often successful at getting the unemployed back to work. One important concern of policy makers is to decide which of these two programmes is more effective and for whom. Using unusually rich (for transition economies) survey data and matching methods, I evaluate the relative effectiveness of these two programmes in Romania. While I find that employment services (ES) are, on average, more successful than a small-business assistance programme (SBA), estimation of heterogeneity effects reveals that, compared to non-participation, ES are effective for workers with little access to informal search channels, and SBA works for less-qualified workers and those living in rural areas. When comparing ES to SBA, I find that ES tend to be more efficient than SBA for workers without a high-school degree, and that the opposite holds for the more educated workers. |
| Keywords: | J21, J23, J31, J64, J65, J68 |
| Date: | 2007–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:712.07&r=lab |
| By: | M. Manacorda; F. C. Rosati |
| Abstract: | This paper uses micro data from the Brazilian PNAD between 1981 and 2002 to ascertain the role that local labor demand – proxied by male adult employment in the area of residence - plays in shaping the work and schooling decisions of children aged 10-15. Contrary to the widespread view that child labor is procyclical, we find evidence that employment (schooling) falls (increases) among young children (aged 10-12) when local labor demand is stronger. This result is consistent with the view that children's work is to a large extent the result of poverty, and that parents want to protect their children from child labor and do so if offered the opportunity. |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:ucw:worpap:34&r=lab |
| By: | Shigeru Fujita; Garey Ramey |
| Abstract: | This paper uses CPS gross flow data, adjusted for margin error and time aggregation error, to analyze the business cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability. Cyclical changes in the separation rate lead those of unemployment, while the job finding rate and unemployment move contemporaneously. Fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment, depending on how the data are detrended. The authors results suggest an important role for the separation rate in explaining the cyclical behavior of unemployment. |
| Keywords: | Job hunting ; Unemployment |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:07-19&r=lab |
| By: | Constant, Amelie; Zimmermann, Klaus F |
| Abstract: | The economic literature has largely overlooked the importance of repeat and circular migration. The paper studies this behaviour by analyzing the number of exits and the total number of years away from the host country using count data models and panel data from Germany. More than 60% of migrants from the guestworker countries are indeed repeat or circular migrants. Migrants from European Union member countries, those not owning a dwelling in Germany, the younger and the older (excluding the middle ages), are significantly more likely to engage in repeat migration and to stay out for longer. Males and those migrants with German passports exit more frequently, while those with higher education exit less; there are no differences with time spent out. Migrants with family in the home country remain out longer, and those closely attached to the labour market remain less; they are not leaving the country more frequently. |
| Keywords: | circular migration; count data; guestworkers; minorities; repeat migration |
| JEL: | C25 F22 J15 J61 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6438&r=lab |
| By: | Herrarte, Ainhoa (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid); Moral Carcedo, Julian (Departamento de Análisis Económico: Teoría e Historia Económica. Universidad Autónoma de Madrid); Sáez Fernández, Felipe (Departamento de Análisis Económico: Teoría e Historia Económica. Universidad Autónoma de Madrid) |
| Abstract: | Taking into account the negative relationship between fertility and female labour participation due to the necessity of dedicating more time to childcare, in this paper we analyse, with a logit model and using microdata from the Spanish Labour Force Survey, the effect of having a newly born child on the woman’s decision to abandon the labour market, considering household characteristics and other economic variables which affect their labour participation decision. Our results show that having a newborn increases the woman’s probability of abandoning the labour market. We also find that this probability is reduced if there are any grandparents living in the household. |
| Keywords: | female labour transitions to inactivity; female activity rates; fertility; household production; reconcile work and family |
| JEL: | J13 D13 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:200711&r=lab |
| By: | Michael Svarer (University of Aarhus, CAM and IZA) |
| Abstract: | This paper investigates the effect of sanctions of unemployment insurance benefits on the exit rate from unemployment for a sample of Danish unemployed. According to the findings are that even moderate sanctions have rather large effects. For both males and females the exit rate increases by more than 50% following imposition of a sanction. The paper exploits a rather large sample to elaborate on the basic findings. It is shown that harder sanctions have a larger effect, that the effect of sanctions wear out after around 3 months and that particular groups of unemployed are more responsive to sanctions than others. Finally, the analysis suggests that men react ex ante to the risk of being sanctioned in the sense that men who face higher sanction risk leave unemployment faster. |
| Keywords: | sanctions, unemployment hazard |
| JEL: | J6 C41 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3015&r=lab |
| By: | Joshua D. Angrist; Stacey H. Chen |
| Abstract: | This paper uses the 2000 Census 1-in-6 sample to look at the long-term impact of Vietnam-era military service. Instrumental Variables estimates using draft-lottery instruments show post-service earnings losses close to zero in 2000, in contrast with earlier results showing substantial earnings losses for white veterans in the 1970s and 1980s. The estimates also point to a marked increase in schooling that appears to be attributable to the Vietnam-era GI Bill. The net wage effects observed in the 2000 data can be explained by a flattening of the experience profile in middle age and a modest return to the increased schooling generated by the GI Bill. Evidence on disability effects is mixed but seems inconsistent with a long-term effect of Vietnam-era military service on health. |
| JEL: | I18 I22 J24 J31 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13411&r=lab |
| By: | Norikazu TAKAMI (Graduate School of Economics, Osaka University) |
| Abstract: | In this paper I examine A. C. Pigou's views on the unemployment policies, based on the premise that, as he himself acknowledged, his theory of business fluctuations was one integral part of his whole thought about unemployment. In his Industrial Fluctuations (1927), Pigou gave the most extensive treatment to the monetary policy among the measures against business fluctuations. There he advocated more prompt and smooth action by the Bank of England in order to effectively stabilize the movement of general prices and the economy as a whole. In order for its action not to be affected by external monetary shocks, he suggested the withdrawal from the gold standard should the public opinion and international diplomatic relations allow it. Pigou, meanwhile, placed much less importance on wage adjustment as a palliative against business cycle. The recent studies direct attention to the fact that Pigou pointed out that after World War I money wages were made rigid by such factors as contemporary institutional changes in labor markets. This picture, however, lacks a more important element of his thought: the monetary cause due to the gold standard on the prewar parity. Putting his indirect remarks on this influence together, I argue that Pigou was well aware of the monetary situation and seemed to place greater importance on the monetary influence than the wage rigidity. |
| Keywords: | history of economic thought, Pigou, unemployment |
| JEL: | B13 B31 E24 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0733&r=lab |
| By: | Pinka Chatterji; Ellen Meara |
| Abstract: | Using annual, repeated cross-sections from national household survey data, we estimate how the January 1997 termination of federal disability benefits for those with Drug Addiction and Alcoholism affected labor market outcomes, health insurance, health care utilization, and arrests among individuals targeted by the legislation. We employ propensity score methods and a difference-in-difference-in-difference approach to mitigate potential omitted variables bias. Declines in SSI receipt accompanied increases in labor force participation and current employment, but had little measurable effect on insurance and utilization. In the long-run, (1999-2002), rates of SSI receipt rebounded somewhat, and short-run gains in labor market outcomes waned. |
| JEL: | I1 I28 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13407&r=lab |